India's Reluctant Urbanization

Thinking Beyond

P. Tiwari, R. Nair, P. Ankinapalli, M. Gulati, P. Hingorani, Jyoti Rao

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137339751
• Topic: Negocios y empresa
• Subtopic: Negocios en general

Through a close examination of India's policies, economic system, social systems and politics, this study explores the numerous perspectives and debates on India's urbanization. The authors link contemporary urban issues with emerging challenges associated with policies and city management.

1

India’s Reluctant Urbanization: Setting the Stage

Introduction

India has been reluctantly urbanizing. The caricature of “urban” in India today is mired in numerous contradictions – both physical and visual – to coalesce in a “landscape of pluralism” (Mehrotra, 2008). Urban migration has added 20 million to cities during the last decade but the charm of big cities is fading away (Pradhan, 2013). This is when only 31 per cent of the country is urbanized, far below other developing countries like China (50.6 per cent). There have been concerted efforts from state and central government to mainstream slums and informal sectors in urban India. Yet there are attempts to clean up Indian cities by ridding streets and public lands of squatters and slums and reclaiming public spaces for the use of “proper citizens”. Even as these public spaces are reclaimed for general use, there is still a proliferation of segregated and protected spaces for elite consumption (Chatterjee, 2004).

There is a stark difference between the quality of life of “haves” and “have nots” in the cities. For those who “have”, the quality of life resembles that of Latin American cities (LSE, 2009), and for those who “have not”, it is not very different from that of many sub-Saharan African countries. The informal sector is the major employer in cities, employing 25 per cent of urban employment compared to the formal sector, which employs 5 per cent. There is rising income inequality between rich and poor, which affects the latter’s ability to access resources and creates cities that are deeply divided. Goldman (2008, p.53) put it eloquently in his article while critiquing the Bengaluru model of world city making:

while the second largest Indian IT firm has backup diesel generators that can run for days at a time, and ships in water from deep rural aquifers, most of the population only receives water from the public distribution system a few hours every third day, access to sanitation/sewerage services is minimal, and flows of electricity are irregular.

Even the new cities built from the scratch are riddled with social and economic contradictions, such as well-planned serviced areas co-existent with slums and shanties – a perennial and almost unavoidable feature of urban growth in the country (Shaw, 2004). These tensions and contradictions have been the result of uneven economic growth, changing demographic patterns in cities, and, lastly, new legislation that politically empowers the excluded. The typical notion of slums, which combines, to varying extents, inadequate access to safe water, inadequate access to sanitation and other infrastructures, poor structural quality of housing, overcrowding, and inadequate and insecure residential status (UN-HABITAT, 2003, p.12), does not fully describe slums in Indian cities. Slums in Indian cities have characteristics which are far more complex, the explanation of which cuts across economic, social, urban, and development disciplines far away from the simple segregation-based notion of ghettos or enclaves used in the context of American cities (Nijman, 2010).

The urban planning and urban form presents another picture of contradiction. Over the years, India managed to mystify the very meaning of planning. At the national level, planning refers to discourse on economic planning and development, whereas “planning” at local level refers only to preparation of a statutory land use plan. This is further reduced to regulating activities through building bye-laws, usually by corruption and deception rather than in a transparent and participative manner (Sivaramakrishnan, 2006). Between these two facets, planning is practised – largely by state-level parastatals and other departments – through the implementation of a collection of projects and schemes (Ibid.). While the coverage of these plans is often limited to core areas of the city, much of the urban growth happens outside the planning jurisdiction. This presents another picture of contradiction through urban form and structure – the core of cities like Mumbai, Delhi, Bengaluru, are becoming low density settlements, while suburbans are becoming denser and denser. In many cities, like Delhi, the rural has been engulfed by the urban but both co-exist, often complementing each other functionally. These cities are also witnessing peri-urbanization on an unprecedented scale: where rich and poor, modern and agrarian economies, nova and traditional cultures contest for space – and this contest is far from harmonious. The governance structure of cities is fragmented, with an inefficient elected government but a powerful nonelected civil society, which often takes the elected government hostage, with mass support from public raising a question: Of what value is suffrage? Often courts, responding to public interest litigations (PILs), have taken centre stage in law-making by issuing directives to the executive and bypassing the formal processes of debate and public participation of a democratic governance system. Mohan and Dasgupta (2004), in the context of infrastructure services and environmental policy, argued that “Judicial criticism may be seem to have become a proxy for urban policy making” (p.22). However, the consequences of such “judicial activism” combined with “bourgeoisie environmentalism” (Baviskar, 2003) have been mixed. While, on the one hand, some of these actions may have been instrumental in improving the urban environment, some of the activism surely curbed the access to urban space and livelihoods, and thereby urbanization itself (Mohan and Dasgupta, 2005; Kundu, 2011).

Understanding the political economy of urban development and the policies would provide much-required pointers to understand these numerous contradictions in urban development in India since independence. From a policy perspective this is a crucial link as the political economy of development provides a lens to understand some of India’s development errors and provide avenues to correct them.

Political economy of development in India

When India got independence, two in three Indians lived in absolute poverty. The modernization of economy under British rule, though, brought railways, canals, property rights, and commercial law, textile mills in Mumbai (or earlier Bombay) and Ahmedabad, and iron and steel industries in Bihar and Orissa, but the overall economy was tattered due to involution of the countryside and the undermining of India’ craft industries as imports flooded in from Lancashire and elsewhere. Loss of the jute economy of East Bengal (first East Pakistan and now Bangladesh) and the major port of Karachi at the time of independence further compounded the economic crisis that the country was facing.

After independence, India chose to become a federal democratic republic, with universal suffrage coupled with the establishment of a central state with considerable executive and emergency powers and vast geographical reach (Corbridge, 2009). The architects of modern India, Nehru and his team, agreed that the social and economic modernization of India would have to be achieved through concerted planned actions emanating from New Delhi. Earlier paradigms for economic development conceived modernization as a diffusion process wherein economic and social change would transpire from major cities to the smallest towns and finally to the countryside (Ibid.). In that process, Mehrotra (2000) argues, India produced a society that the nation had not yearned and hoped for. All efforts were directed to dealing with the splintered society the nation inherited – a society fractured by caste, class, economic disparities, rural urban divides, and a multitude of beliefs and religious affiliations that were wielded together as a nation-state.

According to the theory of “comparative advantage” developed by Ricardo, India, being a latecomer, should develop as primary good producer. However, the theory was already under criticism, as empirical evidence suggested that the prices of non-primary goods rose faster than those of primary goods. So, for a country specializing in primary goods, it would be unfair trade over time. India had to build up local industries as a priority even if it meant a regime of protectionism and tariff barriers. Another development paradigm of the time was import-substitution industrialization, which required the production of capital goods such as iron and steel, chemicals, heavy engineering, and so on. Given that the history of British colonial rule was in the back of mind of our policymakers, foreign direct investment was not encouraged. Strict controls on foreign exchange to promote import-substitution industrialization, and poorly formed capital markets inclined the Government of India to think of “economic development as a project that had to be planned for and delivered by a beneficial state” (Corbridge, 2009, p.6). The economic growth was to be funded by high personal and government savings rates and their effective mobilization for purposes of large-scale industrialization. India would be governed by a development state model, with the Planning Commission and their Five Year Plans playing a central role. It was assumed that the Government of India would be able to funnel resources from the agricultural sector to the non-agricultural sector without much rural backlash (Ibid.). The first wave of capital goods-based production would not be labour intensive. The Arthur Lewis (1954) model of economic development would be realized in second stage of industrialization, which would combine capital goods and surplus labour from countryside to produce consumer goods.

But this was too presumptuous, and a mass farmers’ leader, Charan Singh, in his writings on India’s agriculture and agriculture policy, anticipated that India was suffering from an “urban bias” (Corbridge, 2009). Opponents were quick to point out that, in a country where three-quarters of the population lived in rural areas and agriculture produced more than half of GDP, it made little sense to waste capital on inefficient urban and industrial projects. Instead, the effort should be to fund irrigation infrastructure and create off-farm employment in rural areas. The view gained further currency as the country faced the failure of the monsoon in 1965 and 1966, and new data showed a rise in rural poverty. The economic situation of the country was further damaged after a disastrous war with China in 1962. All these conditions, and deepening democracy, changed the course from “command politics” to “demand politics” (Rudolph and Rudolph, 1987). There was a rise of credible opposition parties and this was also a time when a “prospectively developmental state imploded” (Corbridge, 2009, p.8). The modernizing agenda of Nehru driven by the progressive elite had to negotiate with local level politicians who rarely shared the same commitments to larger benefits or the long term. Country’s modernist state was rooted in the rural India (Kaviraj, 1984). As discussed by Corbridge (2009), the development state was captured by three interlocking groups: rich farmers (who blocked agrarian reforms), industrial bourgeoisie (who took advantage of state-induced scarcities and who blocked competition and innovation), and the country’s leading bureaucrats (who benefited from Permit-License-Quota Raj) (Bardhan, 1984; Bhagwati, 1993). The state was forced to accommodate the demands of various interest groups, irrespective of whether such demands were in the larger interest of the state or not. Consequently, the growth in the 1970s suffered.

At the systemic level, the failure of the Congress Party in 1950s and 1960s to support a development state left the economy between two stools. One, the state was not strong enough to force economic growth with a sound fiscal structure. The state could not do away with subsidies and protectionist barriers that were meant to be temporary (Srinivasan, 1991; Bhagwati, 1993). Second, the central role occupied by the state in India’s productive economy stifled innovation and new start-ups in the organized private sector. The political platform of Congress in the 1970s became “garibi hatao (eliminate poverty)”, but this was never achieved and the policies that hampered growth, in fact, had precisely the opposite impact. The popular politics during 1960s and 1970s showed bias towards “rural” where the majority of the voters lived. The industrial bias was towards the “public” sector. Overall, the GDP grew at a snail’s pace and there was no real rise in per capita income.

During 1980s, neighbouring China commenced its journey, based on a market-oriented growth. In India, the governments of Indira Gandhi and Rajiv Gandhi began to tilt economic policy in the direction of big businesses. Foreign direct investment was still not a priority but a few deals were successfully negotiated. The mantra of “garibi hatao” was retired to the Monopolies Restrictive Trade Practices Act, which made it hard for big businesses in core sectors like chemical, cement, and so on (Corbridge, 2009). Large companies now found it easier to get credit than in the earlier period. Labour activism, which had become the face of industrialization in the 1970s, was also tamed. Private sector investment was encouraged through some tax concessions. This was to shift the balance of capital formation in 1980s. The private sector, though still small, began to contribute to economic development, while the public sector’s role in capital formation had stabilized after a period of rapid growth in 1970s.

The bigger push to embark on liberalization in 1990s did not come from the objective to reduce poverty – in fact Deaton and Dreze (2002) point out that the rate of decline in poverty during 1990s did not differ to that during 1980s despite government claims – but from the realization that huge subsidies in and out of agricultural system (fertilizer, electricity, water into and cheap food out of public distribution system) would push the country deeper into the fiscal and balance of payment crisis that had erupted in 1991. To finance subsidies, the government had resorted to deficit financing and borrowing domestically and abroad as the tax revenue were not sufficient. Tax concessions to big businesses in the 1980s, combined with pervasive tax evasion, did not help either.

The push for reforms in 1990s also came from business communities who were tired of the pro-farming agendas of the National Front government led by Prime Minister V. P. Singh. Global economic thinking was also changing. The USSR had collapsed. Margaret Thatcher had succeeded in dismantling public sector unions in the UK and privatizing production in sectors that had been largely public. Ronald Reagan had succeeded in reversing many ills that the US was facing, having inherited low growth, high unemployment, and high inflation.

The balance of payment crisis in 1991 provided the perfect opportunity for India. Development economics was already out of fashion and what was needed was sound monetary and fiscal policies and to open trade and capital accounts. The system of industrial licensing was dismantled in all but 18 industries and for all locations other than 23 large cities with a population above 1 million (Varshney, 1999). Foreign direct investment was invited into the Indian economy. This signalled India’s new connection to the landscapes of globalization. The telecommunication sector reveals, more than any other, the implications of liberalization, as the telecom revolution swept through middle-class India.

The relation of centre and state has also changed significantly since 1990. Prior to this, India’s states had largely depended on the centre. Given the inelasticity of major state revenues, they were dependent on the centre to seek extra funding as grants-in-aid under Article 275 (Part XII, Constitution of India 1949). Post-1990, the bargaining position of states has changed and they are now actively competing against each other to host foreign direct investment or the funds of non-resident Indians. It is in the states who have used land acquisition and harsh labour laws as two major instruments to attract capital where the momentum of economic reform has taken root. The centre is de facto encouraging states to free up extensive parcels of lands for the deployment of private capital, and nearly 300 special economic zones (SEZs) that have been created since 2005 epitomize this attitude, which is a clear shift in economic policy from agriculture to non-agriculture. The Planning Commission has reinvented its role in stark contrast to the past, from “centralized planner” to “indicative planner and policymaker”, though it continues to engage in preparing Five Year Plans.

In the words of Corbridge (2009, p.19),

What is now evident in India, even more so than previously, is a yawning gulf between the country’s haves and have-nots. For the former, India is shining brightly. It is a land of SUVs and shopping malls. It is a country that seems to be leap-frogging the industrial revolution to land talented people directly to those jobs – in IT, information processing and finance – that connect India to the globalizing world outside. This is the land of SEZs, the Golden Quadrilateral, Gurgaon, the Bandra-Kurla complex in Mumbai, and various technopoles in Bengaluru, Chennai and Hyderabad.

A major impact of advances in capitalism has been that it is sweeping away those institutions that are likely to slow down the circulation time of capital. This is blatantly evident in unprecedented development activity that is taking place on urban fringes or peri-urban locations. Cities in India, which are also the places where rural young men and women want to locate to as they attain higher levels of education, do represent the “modern”.

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Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Figures and Tables
• Acknowledgements
• 1. India’s Reluctant Urbanization: Setting the Stage
• 2. Drivers of Emerging Urban Landscape
• 3. Built Environment
• 4. Productive Environment
• 5. Living Environment
• 6. Natural Environment: Towards (Re)Generative Cities
• 7. Governing Environment
• 8. Thinking Beyond
• Notes
• Index